Strategic Performance Management A Comprehensive Guide

Performance management is one of the important aspects of the HR job profile. It is not just about providing your workforce with a productive and motivating environment where they can work efficiently and achieve the desired objectives. Performance management is a much broader concept that can be achieved if appropriate techniques are used.

According to the statistics, HR managers spend about 210 hours yearly in performance management activities. Apart from providing an effective environment, performance management activities involve leadership, developing interpersonal relationships, effective communication and collaboration strategies, etc. In this blog, we will understand the definition, importance, benefits, and steps for strategic performance management.

Let’s move on to the definition of strategic performance management.

What is Strategic Performance Management?

Basically, strategic performance management is a method to administrate, elevate, and track performance with which organizations can enhance operational efficiency and achieve the established goals and objectives.

 

With this approach, organizations can frame and establish effective guidelines ensuring the workforce is determined to achieve its goals. A majority of managers find it difficult to provide an effective explanation of the performance management process. So, defining the prime responsibilities that are essential and come under the ambit of the performance management process. It includes:

• Establishing the expectations from the workforce and defining a methodology following those expectations can be fulfilled.
• Prepare appraisal plans, and use effective methods to accurately evaluate the performance.
• Frame incentive or bonus strategies to motivate employees to work efficiently.
• Develop plans to assist employees who are not performing effectively.
• Working towards continuous improvement of the organization’s performance capability.

Hence, this is strategic performance management; these management strategies can be applied throughout the board to ensure the accomplishment of objectives.

Why is Strategic Performance Management Important?

Effective strategic performance management assists organizations in elevating their performance and productivity by enhancing workforce performance. There will be severe repercussions if any business enterprise fails to understand the importance of strategic performance management. It will lead them to unaccomplished goals, time and resource wastage, and enhance conflicts of interest.

Strategic performance management is important because it offers clarity to the organization on what changes are required. Strategic performance management is not a fixed approach. It is ever-changing, and organizations need to keep on improvising as and when they encounter a flaw.

Moreover, with strategic performance management, the organizations will be able to figure out the root cause of the problem. Effective and permanent resolutions for the issues can be brought. In addition, a good strategic performance management system assists the workforce in effectively understanding the goals and objectives of the organization.

So, it is evident that strategic performance management is paramount for organizations to achieve the determined goals and objectives. In addition, effective performance management leads the workforce to exponential growth. It is also beneficial to business in many other ways, which we will discuss in the next section.

Benefits of Strategic Performance Management Approach

From the aspects mentioned above, it is clear how important strategic performance management is for business. But if you are still unsure, here are the benefits of strategic performance management.

1. Improves Forecasting

With consistent monitoring and administration of performance, the higher management can figure out the issues. Also, relevant strategies can be framed to overcome the same. This will allow them to forecast effectively, achieve seamless operability, and elevate performance.

2. Elevates Retention Rate

Most of the time, employees leave the organization because of a lack of recognition. But with strategic performance measurement, the organizations will effectively map the performance of the workforce and offer rewards and recognition to the employees working hard. Also, the employees not performing well will get motivated.

3. Increases Engagement

With performance management strategies in place, employees can connect with the management. They can freely share their reviews and feedback regarding any aspect of the organization. This will boost their engagement as they feel valued, leading to enhanced performance.

4. Boosts Productivity

The ultimate strategic purpose of performance management is to elevate overall productivity. All organizations are dependent on their employees. There are high chances of attaining success if the workforce is motivated. So effective strategic performance management process will lead to enhanced productivity, and the organizations can gain a good ROI.

5. Achievement of Objectives

The most important benefit of effective strategic performance management is the accomplishment of goals and objectives. Effective implementation and management will lead the company to definite success, and the employees will grow personally. So, it is beneficial for both organizations as well as employees.

Considering all the factors mentioned above, it is clear that strategic performance management is highly beneficial for organizations. Appropriate performance management strategic planning will provide guaranteed success to the organization and streamline all processes.

What Are the Key Components of Strategic Performance Management?

Once the goals and objectives are determined, you have fanned out the plan on how the workforce talent will be utilized. Now, you require a strategic performance management system with which you can coordinate the resources and conduct processes. The strategic performance management systems comprise a few key components; they are as follows.

1. Tool to Identify and Establish Goals

This tool assists the higher management in analyzing the trends and forecasting, and based on that analysis, defining the goals. The only thing that needs to be taken care of is that the goals must not be extravagant. The objectives must be achievable and should not be stressful for employees.

2. Result-oriented

The system set must be result-oriented, and constant monitoring of performance must be done. In addition, milestones should be set when they are achieved it ensures that the organization is moving in the right direction and goals will be achieved.

3. Employee Demarcation

The system must be such that it should create segments of employees on the basis of performance and the parameters set for each department. This will flush out the employees performing poorly or inconsistently.

4. Allows Integration

Integrating strategic performance management systems with other applications that organizations use is an essential component. For example, integrating a performance management system with a KPI (Key Performance Indicators) application will allow the company to accurately map the ratio of the OKRs achieved by the workforce. With this, the employee’s performance can be accurately mapped, and it will lead to employee development.

5. Enhanced Communication

The management system must offer effective internal communication. So that new objectives or any amendments to the existing goals and objectives can be effectively communicated. Also, the employees can share their reviews and feedback easily. Moreover, the management can also provide constructive feedback after evaluating employee performance.

With all these components, the strategic performance management system will lead the employees to exponential individual growth. This growth will be in consonance with the guidelines provided, which will collectively result in achieving the organizational goals.

Steps to Launch a Successful Strategic Performance Management Plan

The strategic purpose of effective performance management is to help an organization have an effective plan and make it a success. Here are the steps that will be highly assistive in attaining success and launching the strategic performance management plan flawlessly.

1. Effective Collaboration

Mainly a better strategic performance plan is that which elevates employee performance and makes the goals attainable. Once the goals and objectives are framed, the higher management can collaborate with all segments of employees, like managers, leaders, and third-tier employees. The goals shall be distributed in such a way that optimum results can be achieved with effective team collaboration.

2. Leverage Correct Tools

High-end technology can be of great assistance here. This is a digital age, and tools are essential to gain a competitive advantage. There are performance management software available that will be highly assistive as it offers advanced features that automate multiple tasks. Tasks like performance tracking, report generation, offering insight on the improvement of the strategic performance management plan, etc.

3. Change Management Practice

This is essential, as changing the management is complex for employees once things are in motion. But if an employee cannot perform to his/her full potential, then HR needs to conduct this practice. With this practice, HR can overcome the bottlenecks in the process, ensure a result-oriented culture, adjust the employees in the new system effectively, etc.

4. Rewards and Incentives

Every employee wants to be rewarded and recognized for their hard work. So, the organization must be sent OKRs on achieving which the workforce must be awarded incentives or other rewards. This will boost their performance and productivity to a great extent.

5. Performance Review

Performance must be reviewed on the achievement of each milestone. Based on this, the organization can get a clear picture of the employees performing extremely well and those not performing appropriately. With this evaluation, the organizations can reward the employees whose performance has been up to the mark and develop a mentoring plan for those unable to provide the desired results.

Hence, these are the aspect with which an effective strategic performance management plan can be developed and deployed. With effective administration, there is a high chance for the companies to attain success and develop a productive and outcome-oriented work culture.

Best Practices for Strategic Performance Management

The business processes are never constant there are always ups and downs, and to overcome that, the strategies framed need to be improvised every now and then. Different businesses must develop strategies according to their goals, requirements, and operational framework. Here are the best practices that can be followed in general for effective performance management.

1. Consistent Learning

The management must be vigilant in upskilling its workforce consistently. Nowadays, advancements in business processes are frequent. So, in order to make the organizational strategy a success, the entire workforce needs to work at their full potential. This can be achieved by constant learning and upskilling.

2. Check Out for Amendments

The goals and objectives set for strategic performance management must be reevaluated at the end of every quarter or whenever there is an impasse. This will ensure the alignment of workforce efforts with the goals and ensure success.

3. Reports and Analytics

It is impossible to frame an effective performance management strategy with an accurate analysis. With the availability of records on employee performance, an efficient plan for leveraging resources appropriately can be framed. This will elevate the chances of success to a great extent.

4. Get Data-driven

It is known as pervasive intelligence culture in HR terminology. Here the employees can administer their progress, review themselves and get insights on their performance from their mentors or peers. This is highly effective, and employees can take self-improvement on the basis of the data provided.

5. Define the ROI Incubation Period

As the strategic performance management system covers the entire organization in its ambit. It is natural not to expect ROI generation in the first quarter itself. It will take some time for employees to get used to a new system. So, organizations must set an incubation period, which means the organization will start generating ROI after that time frame.

There are the best practices that every organization should administer for successful strategic performance management. These aspects will eliminate ambiguity from the process and ensure the accomplishment of all the goals.

Conclusion

According to a survey conducted by Willis Towers, 98% of companies find performance management systems essential for organizational growth. Performance management systems are essential as business requires technologically advanced tools for optimizing processes. This implementation will streamline the process and improve workforce performance, as many processes will get automated.

Also read: Performance Management Cycle: Four Key Stages To Unlock Success

You can choose a system that matches your budget and requirements. But performance management is an important aspect and must not be taken lightly. As a business, you cannot undermine the concept and risk the chances of attaining success.